Metical appreciates against the dollar

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Metical appreciates against the dollar

6:43 CAT | 17 Mar 2021

Image: DW

The national currency has been appreciating against the US dollar in recent days, albeit slowly, reversing its depreciation against other currencies in the last months.

An economist interviewed by ‘Carta’ says that recent efforts by the Bank of Mozambique to reduce inflation has contributed most to the metical’s appreciation.

As a result of the pandemic crisis, the US dollar rose from 65 meticais at the beginning of 2020 to 75 meticais by last February. Given the intensification of the crisis, some pessimistic predictions indicated that the US dollar would cost 77 meticais by the end of 2020, but this did not materialise, and the trend in the last few days has been for the metical to appreciate.

According to the Bank of Mozambique’s daily exchange rate, US$1.00 is currently sold at 74.29 meticais, against 75 meticais at the end of February. The US dollar purchase price also fell from 74 to the current 72.84 meticais.

Furthermore, at the end of last year, the Euro was being sold at 91 meticais, and has now dropped to 88.55 meticais (sell) and 86.82 (buy).

The South African rand was sold at 5 meticais, but has now fallen to 4.99 meticais. To buy, the rand is currently at 4.89 meticais, and remains expensive compared to last November’s 4.5 meticais.

Even with this appreciation, the metical remains fragile in relation to other currencies, increasing the cost of living for families and of inputs for companies.

To understand the reasons for the appreciation of the metical, ‘Carta’ spoke to economist and academic João Mosca, who said that the appreciation of the metical is due to the fact that the Bank of Mozambique is “injecting foreign currency (dollars) into the national financial market”, to reverse the continuous increase in general prices (inflation) in the country.

Mosca believes that this injection will dictate a future trend of permanent appreciation for the metical.

By Evaristo Chilingue

Source: Carta de Moçambique